Brown takes lead in urging MPs to accept staged pay rise

In an effort to persuade MPs to accept a staged pay rise of 2.56%, Gordon Brown yesterday offered to forgo a large slice of his PM's pension and a salary rise of £26,000 to £215,000, by 2010.

The prime minister, who privately decided last June not to accept a deal that would give him an automatic £128,714 when he left office or lost an election, has also persuaded Jack Straw, the lord chancellor, to decline a similar arrangement. Both will now receive pensions based on their contributions and salaries when they reach the age of 65.

Details of Brown's decision were given to the lobby as Harriet Harman, leader of the House, announced that she had rejected a 2.56% pay award backdated to last April as recommended by the Senior Salaries Review Body.

Instead, and like the police, MPs are to have a staged pay award, with a 0.84% rise backdated to April 1, and a further 1.06% pay rise backdated to November. This award would be on top of an initial 0.66% rise introduced last April.

The effect would be still to increase MPs' pay from £60,277 to £61,820, as recommended by the salaries body, but the staging reduces the value of the payment to 1.9%. This means that future pay awards will start from the £61,820 figure.

Most Labour MPs were not expected to rebel against the award, and with the Conservative frontbench and the Liberal Democrat leader, Nick Clegg, prepared to accept the lower-value rise, it will be up to backbench MPs to decide whether they want the full settlement.

Peter Kilfoyle, a Labour MP and former minister, indicated that he might rebel over the deal.

Harman said: "Under the current procedures of the House the process of determining pay, pensions and allowances rests with MPs. Many of us believe that it is unacceptable, and we know that the public do not accept that we should vote on our own pay and pensions. That is why I have today announced in my written ministerial statement a review of the procedures for setting MPs' pay and pensions in the future, with a view to examining options that find objective criteria for pay determination within a framework that does not require members to vote."

Other changes accepted by the government include a reduced pension contribution scheme for MPs, with a lower pension and better severance pay scheme when ministers leave office.

Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "It would be completely inappropriate for MPs to get a 2.56% pay rise. In these rocky economic times we all have to tighten our belts, and MPs should lead by example. Our parliamentarians are already very well paid and enjoy extremely generous pensions and expenses. Families are struggling under the weight of taxation, so MPs should not add to that burden."